3)Multiple Business Organizations

Operates in more than one industry Example: PepsiCo Snack Food Industry business (Frito Lay); & Beverage Industry Philip Morris Companies Tobacco Industry; Brewery Industry (Miller Brewery); & Food Processing Industry (Kraft General Foods).

Single business organizations

Operates primarily in only one industry (e.g., Coca-Cola Beverage Industry; Wrigley Jr. Company Chewing Gum)

Why Do Firms Diversify

To Grow Increase sales & profitability beyond what firms core businesses can provide Managerial self-serving behavior -- compensation Managerial hubris -- pride or status that come from managing a large business To more fully utilize existing resources and capabilities Skills in sales & marketing, general management skills & knowledge, distribution channels, etc. Single-Entity Business vs. Multi-Entity Business A single entity can be a standalone business or a segment, department, or operating unit within a business. For example, a company's leadership may direct financial managers to prepare a single-entity report for the business region of North America, enabling senior executives to figure out why the business region of Europe, Middle East and Africa is trailing the North America region in terms of profitability. A multi-entity business may be a parent company, holding business, or conglomerate with various subsidiaries, affiliates, and associates. You also may see the concept of multi-entity business applied to a standalone company, especially if business observers take the organization as the sum of various departments, segments, operating units and regions. A single business strategy is a corporate level strategy of a firm which refers to its level of diversification. A single business strategy is one where 95% or more of the total revenue of the business is generated by one individual division or business. The three levels of strategy for a company are corporate, business and functional. Corporate strategy focuses on determining which businesses the company should be in. Business strategy develops competitive advantages within a businesses segment. Functional strategy operates at the level of marketing, operations and finance to ensure that each part of the company has strategies to support the business. For single-business companies, corporate strategy consists of con

Corporate Strategy
Single-business companies have the advantage of focus and rapid response but are vulnerable to problems in their industry. Their corporate strategy must demonstrate the advantages of remaining active in only one industry while evaluating business opportunities in areas with complementary activities. With a goal of optimizing company operations, profitability and growth, the corporate strategy must compare the return of a continuing investment in the single business with the acquisition or starting up of complementary businesses.

Business Strategy
The business strategy of a single-business company is similar to that of a business unit of a diversified company except that the business strategy must support corporate strategic initiatives aimed at the single business. The business strategy sets goals for performance, evaluates the actions of competitors and specifies actions the company must take to maintain and improve its competitive advantages. Typical strategies are to become a low-price leader, to achieve differentiation in quality or other desirable features or to focus on promotion.

Marketing Functional Strategy

In companies that are marketing oriented, the marketing strategy on a functional level influences the other functions and their strategies. A typical marketing strategy is to determine customer needs in an area where the company has a natural competitive advantage. Such advantages might be in location, facilities, reputation or staffing. Once the marketing strategy has identified the kind of product customers want, it passes the information to operations to design and produce such a product at the required cost. The advertising department must develop a promotional strategy, sales must sell the product and customer service must support it. The marketing strategy forms the basis for the strategies of these other departments.

Other Functional Strategies

The non-marketing functional strategies must support the marketing strategy that, in turn, is a component of the overall business strategy. In a single-business company, those strategies are tightly focused on one industry, but they must also deliver data that allows the corporate strategy to examine possible diversification. Single-business companies are usually either highly ranked in their single business or dominant in their niche. The strategies at the functional level try to maintain such a position but also look for external danger signs. If events outside the company's control lead to a deterioration of its position, strategic components from a functional level must signal to the corporate level that an implementation of alternative strategies is required.